-- Group nine-month net sales rise 14% in USD (+12% lc), thanks to
strong underlying growth and market share gains in all divisions
-- Pharmaceuticals growth of 11% (+9% lc) for first nine months
driven by ongoing expansion of Cardiovascular and Oncology
franchises
-- Group operating income up 13% in first nine months, as
Pharmaceuticals volume and margin expansion offsets acquisition
costs in Sandoz and Consumer Health
-- Net income increases 13% to USD 4.8 billion in first nine months,
EPS rises by 15%
-- Integration of Hexal and Eon Labs into Sandoz and of BMS North
American OTC products into Consumer Health progressing rapidly
-- Positive data for key late-stage projects LAF237 (diabetes),
SPP100 (hypertension) and FTY720 (multiple sclerosis) in third
quarter underscore pipeline strength
BASEL, Switzerland, Oct. 18, 2005 (PRIMEZONE) -- Novartis AG (NYSE:NVS):
Key figures
Nine months to Sept. 30
YTD 2005 YTD 2004 % Change
% of
% of net
USD m net sales USD m sales USD lc
---------------------------------------------------------------------
Net sales 23,555 20,669 14 12
Pharmaceuticals 15,014 13,528 11 9
Sandoz 3,121 2,178 43 40
Consumer Health 5,420 4,963 9 7
Operating income 5,417 23.0 4,789(a) 23.2 13
Net income 4,789 20.3 4,247(a) 20.5 13
---------------------------------------------------------------------
Basic earnings
per share/ADS USD USD
2.05 1.79(a) 15
---------------------------------------------------------------------
Third Quarter
Q3 2005 Q3 2004 % Change
% of
% of net
USD m net sales USD m sales USD lc
---------------------------------------------------------------------
Net sales 8,415 7,057 19 18
Pharmaceuticals 5,093 4,646 10 9
Sandoz 1,486 722 106 104
Consumer Health 1,836 1,689 9 8
Operating income 1,888 22.4 1,620(a) 23.0 17
Net income 1,666 19.8 1,469(a) 20.8 13
---------------------------------------------------------------------
(a) Pro forma basis: This report reflects the adoption of new IFRS
accounting standards that became effective on January 1, 2005, and
other presentational changes. In order to provide a comparable basis,
the 2004 pro forma statements reflect these changes as if they had
been in effect already during 2004.
Basic earnings
per share/ADS USD USD
0.71 0.62(a) 15
---------------------------------------------------------------------
Commenting on the results, Dr. Daniel Vasella, Chairman and CEO of Novartis, said, "I am pleased with the overall strong performance of our business in the third quarter, particularly the dynamic growth of Pharmaceuticals and with the positive late-stage results for first-in-class compounds such as LAF237 for diabetes, SPP100 for hypertension, and FTY720 for multiple sclerosis. These medicines address significant patient needs and provide a platform for continued strong growth. Sandoz performed well, especially in key markets, as the integration of Hexal and Eon Labs into Sandoz progressed at a fast pace. Based on the robust results, we are confident of achieving our full-year objectives for new record sales and earnings."
Net sales
Nine months to Sept. 30
-- Group net sales rose 14% (+12% in local currencies, or lc) to
USD 23.6 billion, driven by dynamic growth and market share
gains in Pharmaceuticals as well as strong underlying sales
growth in Sandoz and Consumer Health. Contributions from the
Hexal and Eon Labs acquisitions also supported the overall
performance and added four percentage points to net sales growth.
Volume expansion represented eight percentage points of Group
sales growth in the nine months to Sept. 30 and currency
translation two percentage points. Changes in selling prices
had little impact.
-- Pharmaceuticals net sales advanced 11% (+9% lc) to USD 15.0
billion based on solid double-digit growth in both the strategic
Cardiovascular franchise brands (+15% in USD) and Oncology (+23%
in USD), thanks particularly to Diovan, Gleevec/Glivec, Lotrel,
Femara and Zometa.
-- Sandoz net sales surged 43% (+40% lc) to USD 3.1 billion
following the initial consolidation of Hexal in the third quarter
(June 6 to September 30) and Eon Labs (July 20 to August 31) that
totaled USD 690 million. Excluding these acquisitions, Sandoz
sales were up 12% in USD (+8% lc) due to the dynamic performance
of retail generics in Europe, South Africa and Russia as well as
in the U.S.
-- Consumer Health net sales were up 9% (+7% lc) to USD 5.4 billion,
supported by good growth rates in all business units.
Consolidation of the North American OTC business of Bristol-Myers
Squibb as of September 1 added 0.5 percentage points to sales
growth.
Third quarter
Group net sales up 19% to USD 8.4 billion
Key factors for the 19% increase in third-quarter sales were ongoing high growth in Pharmaceuticals as well as the contributions of Hexal and Eon Labs to Sandoz. Consumer Health sales rose at a high-single-digit rate. Excluding acquisitions, Group sales rose 9% in USD for the quarter.
Novartis increased its share of the global health-care market (including Pharmaceuticals and Sandoz) to 5.27% for the first eight months of 2005, an increase from 5.04% in the 2004 period, which has been restated to include the contributions of Hexal and Eon Labs, according to IMS Health. Pharmaceuticals increased its share of the global health-care market to 3.91% compared to 3.82% for the same period in 2004.
Pharmaceuticals net sales rise 10% to USD 5.1 billion
Strong performances by many leading products -- particularly Gleevec/Glivec, Diovan, Lotrel, Femara and Zometa -- as well as robust growth in the U.S. and other markets such as France, Germany and key emerging markets underpinned the 10% (+9% lc) increase in third-quarter net sales.
General Medicines (excluding Mature Products) delivered a net sales increase of 9% (+9% lc) as strategic Cardiovascular franchise brand sales rose 14% (+14% lc) and the Neuroscience franchise also delivered double-digit net sales gains. Net sales in Specialty Medicines (Oncology, Transplantation and Ophthalmics) were up 16% (+15% lc) as Oncology net sales rose 20% (+19% lc) based on Femara, Gleevec/Glivec and Zometa.
In the U.S., third-quarter sales advanced 11% to USD 2.1 billion as strong performances by the Cardiovascular and Oncology franchises as well as Zelnorm/Zelmac offset lower sales of Elidel. Net sales in Europe rose 4% (+5% lc), supported particularly by Diovan but offset by launches of generic terbinafine in key markets, while Japan grew 4% (+5% lc) and emerging growth markets reported an increase of 22% (+19% lc), thanks to dynamic performances in China, Russia and Turkey.
Sandoz net sales more than double to USD 1.5 billion
Excluding the Hexal and Eon Labs acquisitions, sales were up 10% (+9% lc), driven in particular by volume expansions in France, Russia, India and Italy. Sales in Germany and the U.S. were also higher, but price erosion had an adverse impact. The consolidation of Hexal and Eon Labs for the first time led to a 106% (+104% lc) increase in sales for the third quarter as these businesses performed significantly better than initially expected.
Consumer Health net sales rise 9% to USD 1.8 billion
Net sales for the third quarter rose 9% (+8% lc), helped by a strong double-digit performance from OTC thanks to its focus on seven strategic brands. CIBA Vision delivered high-single-digit growth from the successful roll-out of O2OPTIX contact lens and in other market segments in Europe. Medical Nutrition grew at a low-single-digit rate, reflecting renewed competition in the U.S. and France as well as changing reimbursement rules in Germany. Animal Health benefited from its focus on core brands, but the performance was broadly in line with last year following a reduction in net sales from the fall U.S. sales offer. Infant and Baby benefited from new product launches in the U.S. and Mexico.
Operating income
Nine months to Sept. 30
YTD 2005 YTD 2004(a) Change
% of % of
USD m net sales USD m net sales in %
---------------------------------------------------------------------
Pharmaceuticals 4,656 31.0 4,025 29.8 16
Sandoz 223 7.1 235 10.8 -5
Consumer Health 865 16.0 831 16.7 4
Corporate income
& expense, net -327 -302
Total 5,417 23.0 4,789 23.2 13
---------------------------------------------------------------------
(a) Pro forma basis
Third quarter
Q3 2005 Q3 2004(a) Change
% of % of
USD m net sales USD m net sales in %
---------------------------------------------------------------------
Pharmaceuticals 1,681 33.0 401 30.2 20
Sandoz 34 2.3 12 1.7 183
Consumer Health 290 15.8 292 17.3 -1
Corporate income &
expense, net -117 -85
---------------------------------------------------------------------
Total 1,888 22.4 620 23.0 17
(a) Pro forma basis
Nine months to Sept. 30
-- Group operating income improved 13% to USD 5.4 billion as
ongoing strong volume and margin expansion in Pharmaceuticals
offset an acquisition-related decline in Sandoz.
-- Pharmaceuticals operating income rose 16% to USD 4.7 billion,
outpacing sales and supported by marketing and
administrative-related productivity gains and resulting in an
operating margin of 31.0% compared to 29.8% in the year-ago
period. In additional, Pharmaceuticals benefited from USD 231
million in divestment gains in the first two quarters of 2005.
-- Sandoz operating income declined 5% to USD 223 million, as the
operating income contribution of USD 122 million from Hexal and
Eon Labs acquisitions was more than offset by USD 159 million in
integration costs and other acquisition-related charges. Excluding
these acquisitions, operating income rose 11% to USD 260 million,
supported by higher profit margins from increased volumes.
-- Consumer Health operating income was up 4% to USD 865 million,
reflecting ongoing investments to strengthen key brands and USD
16 million of one-time costs related to the acquisition of the
North American OTC business of BMS.
Third quarter
Group operating income rises 17% to USD 1.9 billion
Operating income rose at a slightly slower pace than net sales in the third quarter as the dynamic performance of Pharmaceuticals as well as the operating and acquisition-related contributions in Sandoz partially offset a modest decline in Consumer Health. Cost of Goods Sold (COGS) was higher, owing to purchase price accounting and increased amortization of intangible assets in Sandoz related to acquisitions.
Pharmaceuticals operating income up 20% to USD 1.7 billion
Operating income growth continued to outpace sales, rising 20% in the third quarter based on sustained profitability improvements that led to a 2.8 percentage point improvement in the operating margin to 33.0% of net sales compared to the year-ago quarter. Productivity gains, especially in the U.S., led to a 1.5-percentage-point improvement in Marketing and Sales, offsetting investments in Oncology related to Femara in the U.S. and Europe, Enablex launches as well as Diovan and Lotrel investments in the U.S. R&D expenses rose at a slower pace than sales, contributing 0.5 percentage points to the improved margin, mainly the result of the timing of expenses compared to the 2004 third quarter. Costs of Goods Sold (COGS) was in line with year-ago levels as a percentage of sales, while General and Administrative expenses contributed 0.3 percentage points to the improvement based on cost-containment measures. A slight decline in Other Income and Expenses compared to the 2004 period also contributed to the higher operating income.
In the third quarter, Novartis recorded an impairment of USD 66 million related to the acquired and capitalized marketing rights for NKS104, a statin no longer being developed for potential use in combination with Diovan. Further development of this compound is being assessed as additional data will become available during the fourth quarter of 2005, which could result in additional impairments.
Sandoz operating income rises to USD 34 million
Operating income rose significantly in the third quarter based on the first-time operating income contributions of USD 122 million from Hexal and Eon Labs as well as volume expansion and cost-containment efforts. This was offset by USD 129 million in purchase accounting and restructuring costs related to the acquisitions. Underlying operating income (excluding Hexal and Eon Labs acquisition effects) increased to USD 41 million.
Consumer Health operating income declines 1% to USD 290 million
The decline in operating income reflected strong investments in key brands as well as one-time costs of USD 16 million related to the acquisition of the BMS product portfolio in OTC in the third quarter. Also negatively impacting the performance were higher production and distribution costs as well as a reduction in net sales from the US fall sales offer in Animal Health.
Group net income advances 13% to USD 1.7 billion
Net income rose 13% to USD 1.7 billion in the third quarter from USD 1.5 billion (pro forma) in the 2004 third quarter. Net income as a percentage of net sales declined to 19.8% from 20.8% in the year-ago period due to the one-time acquisition-related purchase accounting and restructuring costs.
Sandoz positioned for dynamic growth
The integration of Hexal and Eon Labs with Sandoz has made rapid progress, positioning Sandoz for dynamic growth with combined pro forma 2004 sales of USD 5.1 billion and a portfolio of over 600 active ingredients in more than 5,000 dosage forms. Sandoz has a number of advantages, particularly strong positions in key markets such as the U.S. and Germany, a broad technology portfolio, a competitive cost structure with its global production network and a pipeline covering many of the major substances expected to become generic in the coming years with a goal of 80 product introductions annually.
As Hexal and Eon Labs are performing well and exceeding expectations, Novartis now expects for the full year from these acquisitions a sales contribution in excess of USD 1.3 billion and that the net negative effect on operating income will be reduced to between USD 75 million and USD 150 million, a decline from the initial estimate of USD 150 million to USD 250 million made at the end of the second quarter. As a result, the estimated negative impact on Group net income will be reduced to between USD 175 million and USD 250 million from the earlier estimate of USD 250 million to USD 350 million. Group outlook (barring any unforeseen events) Based on the outstanding performance to date in 2005, Novartis reaffirms its confidence in achieving the full-year objectives to deliver high-single-digit net sales growth for the Group and Pharmaceuticals in local currencies as well as record levels of operating and net income on a comparable basis to 2004. (This full-year outlook excludes the impact of the Hexal and Eon Labs acquisitions.)
Pharmaceutical business and key product highlights (Note: All net sales and percentage figures refer to third-quarter 2005 results)
General Medicines
Diovan (USD 925 million) (+17% worldwide; +17% lc; +14% U.S.), the most prescribed angiotensin-receptor blocker (ARB) worldwide, maintained strong growth rates in both the U.S. and Europe in the third quarter, in part supported by two recently approved indications and the global rollout of Co-Diovan, a combination of Diovan and a diuretic. Growth and market share gains in Europe have been driven mainly by Co-Diovan and the launch of new indications. Diovan is the only agent in its class worldwide indicated to treat high blood pressure, high-risk heart attack survivors (VALIANT trial) and patients with heart failure (Val-HeFT trial). In the US, Diovan remained the leader with a 38% share of the ARB market (Source: IMS) despite increased competition. Supporting Diovan in the US has been disease-awareness and education initiatives ("BP Success Zone") that also underpinned Lotrel sales.
Lotrel (USD 269 million only in the U.S.) (+23% U.S.), the No. 1 fixed combination treatment for hypertension in the U.S. since 2002, delivered its strongest growth of the year in the third quarter, in part helped by increasing awareness about the benefits of therapies like Lotrel that combine an ACE inhibitor with a calcium channel blocker (CCB).
Lamisil (USD 318 million) (-8% worldwide; -7% lc; -1% U.S.), the leading treatment worldwide for fungal nail infections, posted modest decline in sales following the expiry of patent protection in most major European markets, including the U.K., Germany, the Netherlands and Italy. In the U.S., Lamisil has maintained market leadership although a generic version of the competitor itraconazole has been introduced.
Zelnorm/Zelmac (USD 113 million) (+36% worldwide; +34% lc +37% U.S.), a novel therapy for irritable bowel syndrome with constipation (IBS-C) and the first and only prescription medicine for chronic idiopathic constipation, maintained robust double-digit growth rates in the U.S. and key markets in Latin America. More than 2.5 million patients have been treated to date with Zelnorm.
Elidel (USD 53 million) (-36% worldwide; -37% lc; -43% U.S.) reported lower sales for the second consecutive quarter following a decline in U.S. prescriptions for the eczema treatment. Novartis is in product labeling discussions with the US Food and Drug Administration (FDA) following the FDA's health advisory statement earlier this year relating to a theoretical risk of lymphoma. Novartis remains confident in the safety and efficacy of Elidel in its approved indications. Specialty Medicines (Note: All net sales and percentage figures refer to third-quarter 2005 results)
Oncology Gleevec/Glivec (USD 547 million) (+33% worldwide; +31% lc; +46% U.S.), indicated for all stages of Philadelphia-chromosome positive (Ph+) chronic myeloid leukemia (CML) and certain forms of gastro-intestinal stromal tumors (GIST), again delivered strong growth rates in the third quarter. This dynamic performance was achieved through further penetration of both the CML and GIST markets as well as an increase in the average daily dose. Gleevec/Glivec recently received EU approval for increasing the average daily dose to 800 mg from 400 mg or 600 mg in patients with chronic phase CML and in GIST patients whose cancer is progressing on the lower dose. Gleevec/Glivec is on track to be submitted by the end of 2005 in the U.S., EU and Japan as a treatment for Ph+ acute lymphoblastic leukemia (ALL) and other rare diseases.
Zometa (USD 302 million) (+15% worldwide; +14% lc; +13% U.S.), the leading intravenous bisphosphonate for bone metastases, reached a record 74% market share in a maturing U.S. market during the third quarter. Greater use in prostate and lung cancer was somewhat offset by slowing growth in breast cancer and myeloma due to high penetration rates. In the EU, Zometa is growing market share despite new competition.
Femara (USD 136 million) (+35% worldwide; +33% lc; +26% U.S.), a leading therapy for early and advanced breast cancer in postmenopausal women, continued to grow strongly based on increased use in the extended adjuvant setting (after standard tamoxifen treatment), an indication approved in more than 75 countries, including the U.S. In August, the FDA granted priority review to Femara for adjuvant (post-surgery) treatment of postmenopausal women with hormone receptor-positive early breast cancer. Regulatory action is now expected before the end of the year. Novartis asked for priority review based on enhanced efficacy in subgroups who may be at an increased risk of relapse for which existing therapies have not demonstrated benefit. Applications for the adjuvant indication have also been filed in Europe. In addition, Femara was recently submitted for approval in Japan for treatment of postmenopausal women with breast cancer, and a decision is expected by the end of 2005 or in early 2006.
Sandostatin (USD 219 million) (+6% worldwide; +5% lc; -7% U.S.), a leading treatment for patients with the hormone condition acromegaly as well as for symptoms of gastro-entero-pancreatic neuroendocrine tumors, achieved positive growth rates due to the performance of the long-acting LAR version, which reported a double-digit increase in the U.S. while the subcutaneous version continued to face generic competition. Sandostatin LAR growth is driven by increasing penetration in carcinoid tumors and acromegaly.
Ophthalmics Visudyne (USD 124 million) (+9% worldwide; +8% lc; -9% U.S.), the top treatment for "wet" AMD (age-related macular degeneration), the leading cause of blindness for people over age 50, continued to grow in the third quarter, helping the business unit to report a 5% (+3% lc) rise in third-quarter sales. In the U.S., sales declined due to new competition, but Visudyne sales growth was strong in other key markets worldwide, including the U.K., Germany and France, with sales outside the US up 25%.
Transplantation Sales for the third quarter were up 7% (+6% lc), supported by unchanged sales of Neoral/Sandimmun (+0% worldwide, +0% lc, -12% U.S.) amid generic competition. Myfortic sales continued to grow in the third quarter, supported by accelerated growth in new prescriptions in the U.S. Certican was launched in Italy during the third quarter, continuing the global rollout. An FDA Advisory Committee is scheduled for November 16 to review the use of Certican in heart transplantation. Product and regulatory update Novartis provided an update on its industry-leading pipeline in September, presenting positive pivotal Phase III data on the potentially first-in-class compounds LAF237 (diabetes) and SPP100 (hypertension) as well as an overview of other key projects in late-stage development. With one of the highest R&D productivity rates in the pharmaceutical industry, Novartis currently has 75 projects in clinical development, including 52 in Phase II, Phase III or registration and of which 46 are new molecular entities (NMEs).
Among the recent highlights:
-- LAF237 (vildagliptin), a potentially first-in-class oral DPP-IV
inhibitor for the treatment of type 2 diabetes, is planned to be
filed with regulatory authorities in the U.S. in the first half
of 2006. New Phase IIb/III trial results presented in September
demonstrated strong efficacy in lowering HbA1c levels (a measure
of average blood sugar levels over a two- to three-month period)
and excellent tolerability without weight gain. New data also
demonstrated clear dose response from 20 mg per day to 100 mg
per day, and that LAF237 offers additional efficacy when added
on to insulin. Due to its novel effects on pancreatic islet
cells, LAF237 has the potential to become a significant new
treatment for type 2 diabetes, either as a monotherapy or
in combination with other commonly used agents. Additional
Phase III data is planned to be available by early 2006.
-- SPP100 (aliskiren), the first in a new class of
anti-hypertension agents called renin inhibitors, is on
schedule for U.S. filing in early 2006. EU submission is
planned for the fourth quarter of 2006 after completion of
longer-term comparative studies. Data from two Phase III
studies presented in September showed powerful double-digit
reductions in blood pressure combined with excellent 24-hour
blood pressure control with placebo-like tolerability for the
once-daily oral treatment, both as a monotherapy and in
combination with the diuretic hydrochlorothiazide (HCTZ).
SPP100, developed in collaboration with Speedel, also has the
potential to offer improved end-organ protection due to its
inhibition of plasma renin activity, an emerging risk factor
for cardiovascular disease. This compound is being explored in
an extensive profiling program in combination and in comparison
with other antihypertensive agents. Data from additional Phase
III studies is planned to be available at the end of 2006.
-- Novartis plans to submit a fixed-dose combination of Diovan
with amlodipine, a calcium channel blocker (CCB), for regulatory
approval in 2006. This would mark the first fixed-dose
combination of the two most prescribed angiotensin-receptor
blockers (ARBs) and CCBs in the marketplace. This combination
will bring together all the benefits of these two leading agents
in one pill. The use of combination therapies is becoming more
common in treating hypertension since the majority of treated
patients require more than one agent to reach their target blood
pressure goals. Fixed combinations of Diovan with other
anti-hypertension agents, including SPP100, are also in clinical
development.
-- FTY720, in development as an oral once-daily treatment for
relapsing multiple sclerosis, is on track to begin Phase III
trials by the end of 2005. Data from the extension of a Phase II
study to 12 months confirmed the substantial efficacy of FTY720
observed at six months in significantly reducing the relapse
rates of patients with this disease, which is estimated to
affect more than two million people worldwide and is the leading
cause of neurological disability in young adults.
-- Preliminary results of the first of two Phase III studies in
transplantation indicated that FTY720 narrowly missed the study
endpoint of non-inferiority to MMF. Further guidance on FTY720 in
transplantation is planned to be provided when results of the
second Phase III study become available in the fourth quarter of
2005.
-- Aclasta(b) (zoledronic acid 5 mg) was shown in a head-to-head
Phase III study published in the New England Journal of Medicine
edition of September 1, 2005, to offer superior efficacy, faster
onset of action and a longer period of remission compared to
risedronate, the current oral standard of care in Paget's
disease. Aclasta was first launched in Germany in May 2005, and
other launches are expected during 2005 and 2006. The FDA
issued an approvable letter for this product for the treatment
of Paget's disease in March 2005, and a complete response was
submitted in August. Phase III trials are underway to
demonstrate the benefits of Aclasta as a once-yearly treatment
for various forms of osteoporosis, with U.S. and EU regulatory
submissions planned for 2007.
-- Xolair (omalizumab), a first-in-class therapy for the treatment of
severe persistent allergic asthma, is awaiting EU regulatory
approval after the Committee for Medicinal Products for Human
Use (CHMP) issued a positive opinion in July 2005. First
approved in the U.S. in 2003 with partner Genentech, Xolair is
set to become the first humanized antibody to be approved for the
treatment of asthma in Europe, representing a highly
innovative approach to controlling this disease.
-- Exjade (deferasirox) (ICL670) received a unanimous
recommendation for approval by an FDA Advisory Committee in
September. Exjade is awaiting US regulatory approval after
being granted a six-month priority review in June 2005 as well
as in the EU, where Exjade also has orphan drug status, and in
Switzerland. As a once-daily oral formulation, Exjade offers the
potential to improve treatment compliance and quality of life of
patients with chronic transfusional iron overload -- a
potentially life-threatening condition -- compared to
deferoxamine, the current cumbersome infusion therapy standard
of care.
-- AMN107, a novel investigational oral compound being developed
as a new treatment for advanced chronic myeloid leukemia (CML)
patients, is planned to be submitted for regulatory approval in
2007. Enrollment in a pivotal Phase II study of patients with
CML resistant or intolerant to Gleevec/Glivec began in April
2005, with a Phase III study in chronic phase CML patients
initiating treatment planned to begin in the first quarter of
2006. AMN107 further expands the Novartis franchise for
helping patients with CML and GIST (gastrointestinal stromal
tumors).
-- PTK/ZK is a new oral targeted therapy designed to block the
growth of blood and lymphatic vessels in development with
Schering AG. Interim analyses of two Phase III studies in
metastatic colorectal cancer (CONFIRM1 and CONFIRM2) showed
that the benefits of combining PTK/ZK with the FOLFOX4 regimen
did not achieve statistical significance, but showed a benefit
in a subset of patients with elevated lactate dehydrogenase (LDH).
In light of these findings this program will be delayed.
Schering and Novartis are reviewing the development strategy
and timeline.
-- Lucentis (ranibizumab), the potential new "gold standard"
treatment for wet age-related macular degeneration (AMD), has
shown strong efficacy and a good safety profile in recent
clinical trials. Lucentis is being developed with Genentech,
which retains the right to develop and market the product in
North America. Regulatory submission is expected in mid 2006
in the EU.
-- All key filings for LDT600 (telbivudine) are planned to be
completed by the end of the first quarter of 2006. The
once-daily treatment for chronic hepatitis B infections
successfully reached its primary composite efficacy endpoint of
therapeutic response in the Phase III GLOBE registration trial.
Full one-year data from this trial will be presented at the
American Association for the Study of Liver Diseases (AASLD)
on November 14. It is being developed in collaboration with
Idenix Pharmaceuticals.
-- Novartis signed a major multi-year alliance with Alnylam
Pharmaceuticals, Inc. to collaborate on research and
development of compounds based on RNA interference (RNAi),
which holds great promise as a new therapeutic approach in
many disease areas, as well as agreed to acquire the global
rights to a novel oral phosphate binder in Phase I for the
treatment of elevated serum phosphate levels (hyperphosphatemia)
in late- or end-stage renal disease patients from SeBo GmBH
of Germany.
Corporate
Corporate income and expense, net
Net corporate expenses were an expense of USD 117 million in the third quarter, an increase from an expense of USD 85 million in the 2004 third quarter, mainly on account of increased charges for legal expenses. In the first nine months, net corporate expenses were USD 327 million compared to an expense of USD 302 million in the year-ago period.
Financial income, net Net financial income in the third quarter was USD 18 million, a decline from USD 35 million in the year-ago quarter as average net liquidity declined due to acquisitions. The overall return on net liquidity was 8.7% compared to 2.5% in the year-ago period, principally due to currency gains. Net financial income for the first nine months was USD 124 million, down from USD 161 million in the same period of 2004, but the return on net liquidity remained steady at 3.7%.
Result from associated companies
Associated companies provided a net contribution of USD 65 million in the third quarter, a decline from USD 98 million in the 2004 third quarter, mainly the result of a profit contribution from Roche during the exceptional first half of 2004. The Group's 42% investment in Chiron Corporation contributed income of USD 17 million in the third quarter compared with income of USD 4 million in the prior-year period. The investment in Roche resulted in income of USD 47 million. This amount consists of an estimated share of USD 76 million of Roche's net income for the third quarter of 2005, partially offset by charges of USD 29 million related to amortization of intangible assets. Associated companies provided income of USD 126 million in the first nine months of 2005, down from USD 154 million in the year-ago period.
Balance sheet
The Group's equity increased by USD 0.4 billion in the first nine months to USD 31.7 billion at September 30, 2005, as a result of the net income of USD 4.8 billion and USD 0.3 billion for share-based compensation, which were partly offset by the dividend payment of USD 2.1 billion, a total of USD 0.3 billion for the purchase of treasury shares, USD 1.8 billion of translation losses and USD 0.5 billion in actuarial net losses.
Reflecting the acquisitions made to date in 2005, net liquidity fell by USD 6.0 billion to USD 1.0 billion at September 30, 2005, from USD 7.0 billion at January 1, 2005, which includes the outlay of USD 8.6 billion to acquire Hexal and Eon Labs as well as the North American OTC business of BMS. The debt/equity ratio at the end of the first nine months remained steady at 0.22:1, the same level as at December 31, 2004.
Novartis repurchased no shares in the third quarter through its share repurchase program via a second trading line on the SWX Swiss Exchange, leaving the total of shares repurchased to date in 2005 unchanged at 10.2 million for USD 0.5 billion. A total of 25.4 million shares have been repurchased for USD 1.2 billion following the start of the fourth share-repurchase program in August 2004.
Novartis is one of the few non-financial companies worldwide to have attained the highest credit ratings from Standard & Poor's and Moody's, the two benchmark rating agencies. S&P rates Novartis as AAA for long-term maturities and A1+ for short-term maturities, while Moody's has rated the company as Aaa and P1, respectively.
Cash flow
Cash flow from operating activities rose by USD 1.0 billion in the first nine months of 2005 to USD 5.8 billion, reflecting the strong business expansion and strict management of working capital. In the third quarter, cash flow from operating activities increased by USD 0.4 billion to USD 2.5 billion. Free cash flow (excluding the impact of acquisitions) in the first nine months of the year rose to USD 3.1 billion, an increase of USD 1.0 billion.
Disclaimer
This release contains certain forward-looking statements relating to the Group's business, which can be identified by the use of forward-looking terminology such as "on track", "is set to become", "holds great promise", "will", "anticipate", "outlook", "expect", "pipeline", "potential", "planned", "will be", "intends to", or similar expressions, or by express or implied discussions regarding potential future sales of new or existing products, potential new products or potential new indications for existing products, or by other discussions of strategy, plans or intentions. Such statements reflect the current views of the Group with respect to future events and are subject to certain risks, uncertainties and assumptions. There can be no guarantee that any products will reach any particular sales levels, or that any new products will be approved for sale in any market, or that any new indications will be approved for existing products in any market. In particular, management's expectations could be affected by, among other things, new clinical data; unexpected clinical trial results; unexpected regulatory actions or delays or government regulation generally; the Group's ability to obtain or maintain patent or other proprietary intellectual property protection; competition in general; government, industry, and general public pricing pressures and other risks and factors referred to in the Group's current Form 20-F on file with the U.S. Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. Novartis is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.
About Novartis
Novartis AG (NYSE:NVS) is a world leader in pharmaceuticals and consumer health. In 2004, the Group's businesses achieved net sales of USD 28.2 billion and pro forma net income of USD 5.6 billion. The Group invested approximately USD 4.1 billion in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ about 91,700 people and operate in over 140 countries around the world.
For further information please consult http://www.novartis.com.
Further Important Dates
January 19, 2006 Full-year 2005 results February 28, 2006 Annual General Meeting
Please find full media release in English attached. http://hugin.info/134323/R/1016397/158959.pdf
(b) Zoledronic acid (5 mg) is authorized to be marketed under the name Aclasta in Europe and is awaiting U.S. approval of a different trademark.